Significant new advances were made in discovering mechanisms of retrovirus-induced immunosuppression in the Friend virus model. We found that regulatory T cells suppressed anti-tumor responses in persistently infected mice. Importantly, we were able to restore anti-tumor responses by treating mice with anti-GITR antibodies which stopped suppression by regulatory T cells. The mechanism of action of the anti-GITR treatments was improved and faster type 1 helper and cytotoxic T cell responses. Our results indicated that the constitutive levels of suppression by regulatory T cells in normal mice delay immune responses to viral infections. We also investigated virus escape from virus-specific CD8+ T cell responses in persistently infected mice. Escape was not due to mutation of the CTL epitope, clonal deletion of virus-specific T cells, or interference with antigen presentation. Rather, we found that the virus-specific CD8+ T cells had dysfunctional effector activity, similar to what has been observed in HIV patients. The association between defective CD8+ T cells and regulatory T cells in the persistently infected mice was investigated. Adoptive transfer experiments revealed that CD4+ T cells from persistently infected mice produced IL-10 which diminished interferon gamma production by virus-specific CD8+ T cells. This new mechanism of virus escape opens new possiblities for anti-retroviral therapies.